PacifiCare Shares Lose 8% on Tender Offer Extension

Earnings: The move is part of a $1-billion plan to sell notes and refinance the company's bank debt, which expires in December.

Shares of PacifiCare Health Systems Inc. fell nearly 8% on Monday after the biggest U.S. operator of Medicare health plans extended a tender offer for its senior debt.

Shares lost $1.27 to close at $15.65 on Nasdaq, after touching $14.61. The shares had fallen 8.5% since PacifiCare lowered its 2001 profit estimate May 30.

Santa Ana-based PacifiCare extended its tender offer for $100 million in outstanding senior notes by a week. The offer had been set to expire Monday. It is part of a $1-billion plan to sell notes and refinance the company's bank debt, which expires in December.

Thomas Shinkle, an analyst at Imperial Capital, said it's too big a deal right now. "It wouldn't surprise me if the company puts the whole thing down and lets it ride for three or six months until they publish some good earnings," Shinkle said.

PacifiCare has struggled as it began moving away from paying health-care providers fixed monthly fees at the same time medical costs started rising more than anticipated.

Analysts in particular have criticized the company for not being able to gauge expenses and forecast profit.

Last week, PacifiCare said it expects to report second-quarter profit of 45 cents a share, higher than the 32-cent average estimate of analysts surveyed by First Call/Thomson Financial. In May, PacifiCare cut its 2001 earnings target to $1.65 to $1.75 a share from $2.94.